Capvino Cash Loans CC v National Credit Regulator (NCT/76167/2017/140(1)) [2017] ZANCT 137 (18 December 2017)

Nm, IN THE NATIONAL CONSUMER TRIBUNAL

HELD IN CENTURION

Case Number: NCT/76167/2017/140(1)

In the matter between:

CAPVINO CASH LOANS CC

APPLICANT

and

NATIONAL CREDIT REGULATOR

RESPONDENT

Coram:

Andisa Potwana – Presiding Member

CONDONATION RULING

INTRODUCTION

1. In this application for condonation:

1.1. The Applicant, the Respondent in the main matter, is Capvino Cash Loans CC, a close corporation that is duly incorporated and cited as an unregistered credit provider in the main application.

1.2. The Respondent, the Applicant in the main matter, is the National Credit Regulator, a juristic person established by section 12 of the National Credit Act, 34 of 2005 (the Act); and

1.3. The Applicant and the Respondent will be referred to as they appear in this application.

BACKGROUND

2. On or about 21 February 2017 the Respondent lodged an application with this Tribunal seeking various orders against the Applicant including an order declaring that the conduct of the Applicant constitutes a contravention of various provisions of the Act and its regulations (the regulations)[1] and the Respondent's conditions of registration. The Applicant did not file an answering affidavit within the time permitted in the regulations and had to request condonation for the late filing of an answering affidavit. Condonation was granted on 30 June 2017 and the Applicant filed the answering affidavit on 10 July 2017. The Respondent filed a replying affidavit on 24 July2017.

3. On 17 August 2017 the Registrar of the National Consumer Tribunal (the Registrar) issued a notice of set down notifying the parties that the hearing was set down for hearing on 21 September 2017. The notice was served by electronic mail.

4. After receiving the notice of set down the Applicant sent an e-mail to the Respondent’s attorney stating that the Respondent had until Monday 28 August 2017 to withdraw the matter failing which the Applicant would have to file a supplementary affidavit.

5. On 7 September 2017 the Applicant filed a “supplementary answering affidavit: points in limine”. It appears from this affidavit that between the 7th and the 19th of September 2017 there was an exchange of correspondence between the Applicant’s attorney, the Respondent’s attorneys and the Registrar which resulted in the Registrar sending an e-mail to the parties on 19 September 2017 stating that:

“In light of the agreement between the parties the registrar’s office will remove the matter from the hearing roll and further direct that the Respondent file its condonation application in respect of the supplementary affidavit on or before 02 October 2017…”

6. On 2 October 2017 the Applicant filed its founding affidavit for condonation for filing a supplementary answering affidavit. The Applicant’s affidavit in support of the application is deposed to by the Applicant’s attorney, Mr. Johannes Hendrik Cilliers.

7. The Respondent has not filed any opposing documents.

APPLICANT’S SUBMISSIONS IN SUPPORT OF THE APPLICATION

8. The Applicant submits that granting condonation is in the interest of justice and will create legal certainty and avoid future frivolous or unnecessary litigation.

9. The Applicant also submits that the supplementary affidavit it has already filed relates to certain points in limine which if heard and found in favour of the Applicant would mean the end of the matter.

10. The first point in limine raised by the Applicant relates to lis pendens in that there are several matters that are pending before the high courts that may have an impact on the main hearing.

11. The first matter is a case that was heard under case number 16746/2016 in the High Court in Pretoria. The judgement in this matter reviewed and set aside regulations 42, 43 and 44 of the regulations. However, that decision is pending in an appeal before the Supreme Court of Appeal (SCA). The Applicant submits that the complaints against the Applicant relate, inter alia, to these regulations having been contravened and that no order was made that the regulations that were reviewed and set aside would prevail pending the appeal. In essence, the Applicant contends that this “creates a situation where in actual fact no regulations regarding rates and fees (regulations 42, 43 and 44 are in existence)” (sic in toto).

12. The second matter is a case that was initiated by the Information Technology Consultants (Pty) Ltd, commonly known as Stelland against the Respondent. This case is pending hearing before the North Gauteng High Court and relates to supplementary agreements.

13. The third matter is a case that was instituted by the Micro Finance South Africa against the Respondent and the Minister of Trade and Industry. This case is pending hearing before the North Gauteng High Court and “pertains to the interpretation of the definition of deferred amount in the National Credit Act and to have clarity on what this amount includes in terms of fees.”

14. The Applicant avers that the Respondent “is very much aware of the other matters pending before courts which would have a bearing on this matter before the Tribunal.”

15. The second point in limine raised by the Applicant is that the complaint initiated by the Respondent is not a complaint with the criteria set out under section

136 of the Act in that before an investigation can be conducted. A complaint has to be issued in terms of section 136. The Applicant

makes reference to the “Capitec matter” in which the Tribunal found that the investigation and referral was invalid and the subsequent appeal which was dismissed by the High Court in Pretoria.

16. The Applicant also alleges that the Respondent did not issue a compliance notice and refers to cases cited in its supplementary affidavit. In its supplementary affidavit, the Applicant alleges that instead of an investigation the Respondent conducted a “fishing expedition” as there was no reasonable suspicion that the Applicant had contravened the Act and thus no reasonable basis for initiating an investigation against the Applicant. In addition, the Applicant states that “I have been advised that this matter is similar in nature as to case NCT/8616/2013/57(1) NCR V The Trustees of the Progress Group Trust (the Progress case) in that the investigation was initiated by the Applicant without any specific complaint or information received”. The Applicant also makes reference to the case of Woodlands Dairy (Pty) Ltd and Another v The Competition Commission (105/2010) [2010] ZASCA 104 (13 September 2010) (“the Woodlands dairy case”).

17. The third point in limine raised by the Applicant relates to the issue of error in persona. In support of this point, the Applicant states that the Respondent had several branches which had their own separate bank accounts and used their own capital to lend money to consumers. The Applicant submits that at the time of the investigation it was in the process of registering with the Respondent. Further, the Applicant states that it received no financial or other benefit from any of the operating branches including the premises that were investigated by the Respondent, Capvino Wellington, and that the person who was in charge of Capvino Wellington, Mr Zuang, and should explain and answer to the allegations has absconded. The Applicant avers that Mr Zhuang did not act in accordance with the way and manner that he was advised. It is important to note that the Applicant does not aver that it did not give CapVino Wellington permission to operate pending the outcome of the registration process it had started with the NCR. In fact, the Applicant submits that two of its branches were in different stages of operation.

18. The Applicant concludes by submitting that if it were successful with any of the points in limine, the merits of the main matter cannot be dealt with.

LEGAL PRINCIPLES

19. It is appropriate that I set out the relevant statutory and regulatory provisions as well as the case law governing condonation applications.

20. Rule 34 (1) (d)[2] provides that "A party may apply to the Tribunal in Form TI r.34 for an order to condone any other departure from the rules of procedure". Rule 34 (2) states that the Tribunal may grant the order on good cause shown.

21. Rules 13 (1) and (2) respectively provide that:

"(1) Any person required by these Rules to be notified of an application or referral to the Tribunal may oppose the application or referral by serving an answering affidavit on:

(a) the Applicant; and

(b) every other person on whom the application was served.

(2) An answering affidavit to an application or referral other than an application for interim relief must be served on the parties and filed with the Registrar within 15 business days of the date of the application”.

22. Rule 13(5) provides that “Any fact or allegation in the application or referral not specifically denied or admitted in an answering affidavit, will be deemed to have been admitted.”

23. To condone means to “accept or forgive an offence or wrongdoing”. The word stems from the Latin term condonare, which means to “refrain from punishing”[3]. It can also be defined to mean “overlook or forgive (wrongdoing)”[4].

24. In Head of Department, Department of Education, Limpopo Province v Settlers Agriculture High School and Others[5] it was held that the standard for determining an application of this nature is the interests of justice.

25. Whether it is in the interests of justice to grant condonation depends on the facts and circumstances of each case. It requires the exercise of a discretion on an objective conspectus of all the facts. Factors that are relevant include but are not limited to the nature of the relief sought; the extent and cause of the delay; the effect of the delay on the administration of justice and other litigants; the reasonableness of the explanation for the delay; the importance of the issue to be raised in the intended appeal; and the prospects of success.[6]

26. In Melane v Santam Insurance Company Limited[7](Melane judgement) it was held that:

“In deciding whether sufficient cause has been shown, the basic principle is that the Court has a discretion, to be exercised judicially upon a consideration of all the facts, and in essence it is a matter of fairness to both sides. Among the facts usually relevant are the degrees of lateness, the explanation therefor, the prospects of success and the importance of the case. Ordinarily these facts are inter-related; they are not individually decisive, save of course that if there are no prospects of success there would be no point in granting condonation. Any attempt to formulate a rule of thumb would only serve to harden the arteries of what should be a flexible discretion. What is needed is an objective conspectus of all the facts. Thus a slight delay and a good explanation may help to compensate for prospects of success which are not strong. And the Respondent's interests in finality must not be overlooked

27. The dictum in the Melane judgement reveals that judicial discretion based on fairness is imperative.

CONSIDERATION OF THE MERITS OF THE APPLICATION

28. I will now consider, in turn, each of the factors mentioned in the Melane judgement.

The nature of the relief sought

29. According to the Applicant, the purpose of this application is to file a “supplementary answering affidavit: points in limine” so as to “set out and ventilate certain material points of law” upon which the Applicant wants to rely on at the hearing. Although these issues are already contained in the Applicant’s answering affidavit the Applicant submits that “These issues need to be dealt with and addressed first as points in limine before the main matter can be deal with”.

30. The regulations do not provide for the filing of a supplementary affidavit hence it becomes necessary that respondents apply for condonation whenever they wish to file such.

The extent and cause of the delay

31. As evidenced by the correspondence between the Applicant’s attorneys, the Respondent’s attorneys and the Registrar, it cannot be said that the Applicant was lackadaisical in seeking an opportunity to file a supplementary affidavit and the delay is not extensive.

The effect of the delay on the administration of justice and other litigants

32. The filing of the supplementary affidavit provides an opportunity for the Applicant to accentuate

and properly formulate its points in limine. This will also assist the Tribunal to properly understand these points and rule on them which is imperative for the administration of justice.

33. The Respondent consented to the filing of the application for condonation and has not opposed it. If condonation is granted the Respondent will be given an opportunity to file a supplementary replying affidavit.

The reasonableness of the explanation for the delay

34. The Applicant has not proffered any direct explanation for not raising the points in limine in the answering affidavit in the same manner that it does in the supplementary answering affidavit save for submitting that “The purpose of this application is to set out and ventilate certain material points of law upon which the Applicant wants to rely on at the hearing all in addition to the grounds raised upon which the matter is opposed as set out in the Answering Affidavit filed by the Respondent.”(sic in toto).

35. However, the time lapse between the filing of the answering affidavit and the filing of the supplementary affidavit is not extensive.

The importance of the issues to be raised in the hearing

36. The filing of the Applicant’s supplementary affidavit which accentuates the Applicant’s points in limine is of great importance as it provides an opportunity for the points in limine to be properly brought before the Tribunal. If the Applicant succeeds on any of the points in limine, the hearing may not proceed further.

Prospects of success

37. Regarding the issue of lis pendens, my view is that the Applicant’s prospects of succeeding with this point in limine are quite minimal as none of the cases that the Applicant has mentioned are between the Applicant and the Respondent and are based

on the same cause of action in respect of the same subject matter. In Nestlè (South Africa) Pty Ltd v Mars Inc.[8], Nugent AJA said:

“There is room for the application of that principle only where the same dispute, between the same parties, is sought to be placed before the same tribunal (or two tribunals with equal competence to end the dispute authoritatively). In the absence of any of those elements there is no potential for a duplication of actions.”

38. I also do not agree with the Applicant’s contention that the pending appeal in respect the regulations that were reviewed and set aside creates a situation where in actual fact no regulations regarding rates and fees exist. In my view, the setting aside of those regulations simply means that, in the absence of any other specific stipulation, the regulations that applied prior to the promulgation of the reviewed regulations will continue to apply.

39. Regarding second point in limine which relates to the legality of the investigation that was conducted by the Respondent, the Applicant relies heavily on the judgement of this Tribunal in the matter of The National Credit Regulator v Capitec Bank Ltd[9] and the subsequent appeal that was dismissed by the High Court in Pretoria. In this matter the Respondent authorised an investigation

without first having a rational basis to form a reasonable suspicion that Capitec was contravening the Act. In the present case, the Respondent explained that it initiated a complaint by way of a memorandum wherein the Applicant was identified, during a general

monitoring exercise as a credit provider that may be conducting their credit lending activities in contravention of the Act. In the said memorandum it is stated that a complaint is initiated against certain entities which “could be engaging in prohibited conduct of retaining consumers’ bank cards and ID books as surety for loans granted or for debt collection purposes. Some entities are operating as credit providers without being registered with the NCR…” It is my view that the Tribunal hearing the points in limine might find that this is an insufficient basis for forming a reasonable suspicion that the Applicant, specifically, was involved

in contravening the Act and initiating a complaint against the Applicant. It is also my view that the Applicant’s reliance on the decision of the Supreme Court of Appeal (SCA) in the Woodlands case whereat SCA ruled against the Competition Commission’s

initiation of a complaint without information that could give rise to a reasonable suspicion that Woodlands was involved in contravening

the Competition Act is well founded.

40. I also find that there is merit in the Applicant’s reliance on the judgement of this Tribunal in the Progress case whereat it was found that the investigation was invalid on the basis, amongst others, that “It cannot be said that the NCR has a reasonable basis for initiating an investigation into the Respondent”. In the present matter, the Tribunal will have to decide whether the Respondent had a reasonable basis to investigate the Applicant’s conduct based on the information that the Respondent claims was obtained during the Respondent’s general monitoring exercise. The Applicant contends that in the memorandum initiating the complaint the Respondent does reveal the information it had to justify the initiation of a complaint and that the investigation was a fishing expedition. Therefore, it is possible that the Applicant can prove, on a balance of probabilities; that the information that the respondent had before initiating the complaint against Applicant was insufficient to form a reasonable suspicion.

41. On the issue of an “error in persona” I hold of the view that it is unlikely that the Applicant will be able to persuade the Tribunal that, in spite of permitting Capvino Wellington to use the Applicant’s name and instructing the person in charge on how to grant loans and notwithstanding the fact that the Applicant was aware of the fact that this branch was not registered with the Respondent, the Applicant is not liable for the activities that took place at Capvino Wellington.

42. It is trite that if the Tribunal were to uphold any of the points in limine relied upon by the Applicant, the Respondent’s complaint against the Applicant cannot proceed and I find that this is possible.

CONCLUSION

43. I am persuaded that the Applicant has shown good cause that it is in the interests of justice that the condonation application be granted.

ORDER

44. Accordingly, the Tribunal makes the following order:

44.1 The filing of the Applicant’s supplementary answering affidavit is condoned;

44.2 The Respondent is given an opportunity to file a replying affidavit within 10 days of the issuing of this order; and

44.3 There is no order as to costs.

Thus handed down; in Centurion; this 18th Day of December 2017.

{signed}

Andisa Potwana

PRESIDING MEMBER

NATIONAL CONSUMER TRIBUNAL

[1] Regulations made under section 171 of the Act on 31 May 2006 and amended on 30 November 2006.

[2] Regulations for Matters Relating to the Functions of the Tribunal and Rules for the Conduct of Matters before the National Consumer

Tribunal, 2007

[3]Oxford English Dictionary, Second Edition at pg 151.

[4]Collins English Dictionary and Thesaurus, Fourth Edition 2011, at pg170.

[5] 2003 (11) BCLR 1212 (CC) at para[11].

[6]Van Wyk v Unitas Hospital and Others 2008(4) BCLR 442 (CC) at para 20 as applied in Camagu v Lupondwana Case No 328/2008 HC Bisho.

[7] 1962 (4) SA 531 (A) at 532C-E.

[8] 2001(4) SA 542 (SCA) PARA 17.

[9] (A440/2014) [2016] ZAGPPHC 125 (23 March 2016).